Shareholders Should Be Pleased With T-Robotics.Co.,Ltd.’s (KOSDAQ:117730) Price
T-Robotics.Co.,Ltd.’s (KOSDAQ:117730) price-to-sales (or “P/S”) ratio of 3.4x may look like a poor investment opportunity when you consider close to half the companies in the Machinery industry in Korea have P/S ratios below 1x. However, the P/S might be quite high for a reason and it requires further investigation to determine if it’s justified.
Check out our latest analysis for T-Robotics.Co.Ltd
How T-Robotics.Co.Ltd Has Been Performing
Recent times have been advantageous for T-Robotics.Co.Ltd as its revenues have been rising faster than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. However, if this isn’t the case, investors might get caught out paying too much for the stock.
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How Is T-Robotics.Co.Ltd’s Revenue Growth Trending?
T-Robotics.Co.Ltd’s P/S ratio would be typical for a company that’s expected to deliver very strong growth, and importantly, perform much better than the industry.
Retrospectively, the last year delivered an exceptional 64% gain to the company’s top line. Revenue has also lifted 12% in aggregate from three years ago, mostly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.
Turning to the outlook, the next year should generate growth of 45% as estimated by the lone analyst watching the company. With the industry only predicted to deliver 25%, the company is positioned for a stronger revenue result.
In light of this, it’s understandable that T-Robotics.Co.Ltd’s P/S sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.
The Key Takeaway
Using the price-to-sales ratio alone to determine if you should sell your stock isn’t sensible, however it can be a practical guide to the company’s future prospects.
Our look into T-Robotics.Co.Ltd shows that its P/S ratio remains high on the merit of its strong future revenues. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.
It’s always necessary to consider the ever-present spectre of investment risk. We’ve identified 3 warning signs with T-Robotics.Co.Ltd (at least 2 which don’t sit too well with us), and understanding them should be part of your investment process.
If you’re unsure about the strength of T-Robotics.Co.Ltd’s business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
Valuation is complex, but we’re helping make it simple.
Find out whether T-Robotics.Co.Ltd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
